Numeral Secures Funding to Streamline Sales Tax Management

Sam Ross, who co-founded and serves as CEO of Numbers, first developed the idea for his sales tax compliance startup during his time as a product manager at Airbnb. That was back in early 2018 when he was not yet working remotely like he does today. At that time, consumer businesses were becoming really popular, which allowed him to support his traveling aspirations by managing several e-commerce brands on the go. He still runs an online jewelry shop and maintains a site focused on vitamin sales.

Despite enjoying the freedom his businesses provided, Ross was consistently frustrated by the complex nature of managing sales taxes for the products he sold.

Before 2018, e-commerce and software companies generally didn’t need to collect sales taxes in states where they didn’t have a physical presence. However, the Supreme Court later ruled that these businesses must start collecting sales taxes where their clients are located.

“Suddenly, I was dealing with tax obligations for more than 40 states just because I had clients in California. It was definitely painful,” Ross explained.

When he applied to Y Combinator in 2023, his former boss from Airbnb, Gustaf Alstromer, encouraged him to create a startup that automates all facets of sales tax management.

Numeral announced this week that it secured $35 million in Series B funding, bringing its valuation to about $350 million, a jump from the $18 million Series A round, which had backing from Mayfield and several other investors like Benchmark and Y Combinator.

While various software solutions exist for managing sales tax, Ross believes that utilizing AI can simplify the process, almost functioning like a human tax accountant. This includes tracking tax law changes in over 11,000 jurisdictions, as well as managing tax-related correspondence and filing duties.

AI is capable of overseeing the bulk of sales tax processes because the majority of tax rules are straightforward. Therefore, issues of misinterpretation are minimized.

“That said, some tax laws can get quite absurd,” Ross noted. “For example, in New York, a full bagel is tax-exempt, but if you slice it in half, it becomes taxable since it’s considered ready-to-eat.”

Numeral’s AI is designed to navigate these quirky regulations.

Last year, the startup reported a 3.5-fold increase in revenue and now provides services to over 2,000 clients across the software and e-commerce spectrum, including companies like Eight Sleep and Graza Olive Oil.

Sales tax management may seem niche, yet there are other startups tackling this issue, like Anrok and Zamp. The incumbent Avalara, a 26-year-old company, is also looking to go public later this year.

Ross believes that Numeral’s ability to file taxes internationally distinguishes it from others in the market. “We handle tax filings for clients in places like Tanzania and Kenya, where they typically had to rely on CPA firms,” he added.